United Online Reports Loss

Published 8:00 pm, Tuesday, February 5, 2002

United Online Inc., a discount Internet service provider created last September with the merger of NetZero and Juno Online Services, reported a net loss of $15.7 million, or 41 cents a share, on revenue of $48 million in its first three months of operation ended Dec. 31.

The results reported Wednesday compare to a loss of $23.9 million, on sales of $42 million, the combined results of the two independent firms in the previous quarter ended Sept. 30.

NetZero and Juno both used to have millions of free users. The program, which was paid for by sending additional ads to users, helped them increase their exposure in a crowded field.

The new combined company has begun to cut back on the free service, reducing its subscriber base by 14 percent in the quarter, United said.

At the same time, the firm said it added 214,000 new paying subscribers in its fiscal second quarter, increasing its paying customer base by 17 percent to 1.5 million.

United Online charges users about $10 a month for service, less than half the amount leading ISPs like AOL, EarthLink and MSN charge.

Mark Goldston, chairman and chief executive of United Online, said "valued-priced" Internet access will be the fastest growing segment of the ISP market in the future. Latecomers to the Internet, who have been waiting for the price of personal computers to decline, will be a key market, he said.

United Online said its plans to increase its paying subscriber base by between 15 percent and 18 percent during 2002.